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Rama09 [41]
2 years ago
5

Flounder Inc. issues 500 shares of $10 par value common stock and 100 shares of $100 par value preferred stock for a lump sum of

$104,000. (a) Prepare the journal entry for the issuance when the market price of the common shares is $164 each and market price of the preferred is $205 each. (b) Prepare the journal entry for the issuance when only the market price of the common stock is known and it is $178 per share.
Business
1 answer:
ipn [44]2 years ago
6 0

Answer:

a.

Journal Entries

Dr. Cash ___________________$104,000

Cr. Common Stock ___________$5,000

Cr. Preferred stock ___________$10,000

Cr. Paid in capital Common Stock $78,200

Cr. Paid in capital Preferred stock $10,800

b.

Dr. Cash ___________________$104,000

Cr. Common Stock ___________$5,000

Cr. Preferred stock ___________$10,000

Cr. Paid in capital Common Stock $84,000

Cr. Paid in capital Preferred stock $5,000

Explanation:

a.

First, we need to calculate the fair value of each type of shares using the following formula

Fair value  = Numbers of shares x Fair value per share

Fair Value of Common Share = 500 shares x $164 per share = $82,000

Fair value of preferred share = 100 shares x $205 per share = $20,500

Total value of shares = $82,000 + $20,500 = $102,500

Now allocate the Value of $104,000 bases on the fair value

Allocation to

Common stock = $104,000 x $82,000 / $102,500 = $83,200

Preferred stock = $104,000 x $20,500 / $102,500 = $20,800

Now calculate the par values

Par Values

Common stock = 500 shares x $10 = $5,000

Preferred stock = 100 shares x $100 = $10,000

Now calculate the additional paid-in capital

Additional paid-in capital

Common stock = $83,200 - $5,000 = $78,200

Preferred stock = $20,800 - $10,000 = $10,800

b,

Value of common stock = $178 per share x 500 shares = $89,000

Additional paid in capital

Common stock = $89,000 - $5,000 = $84,000

Preferred stock = $104,000 - $89,000 - $10,000 = $10,000

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Explanation:

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On the case of the client who works in a bank granting the registered representative a mortgage with lower interest rates, this cannot be possible because: first, the client's position in the bank was not clarified and secondly, the registered representative's credit scores will be the evaluation report used by the bank to grant that.

7 0
3 years ago
You work in the finance division of a company listed in the Stock Exchange. You have just learned that your supervisor has been
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Answer:

  • Yes it is.
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Explanation:

Trading on the stock exchange is supposed to be as fair as possible so that every investor has a fair chance of making returns. If a person - like this supervisor - is using information that is material but not publicly disclosed yet to trade on markets, the fairness of the market is compromised because the person will have an edge over other investors which will enable them make unfair profits.

Information on quarterly returns is usually material so we can expect it to be material here as well which means that the supervisor is engaged in insider trading.

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8 0
2 years ago
4. How might living under anarchy be desirable, compared to other forms of government with more power? How might it be bad? (4 p
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6 0
3 years ago
Dunstreet's department store would like to develop an inventory ordering policy of a 95 percent probability of not stocking out.
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Answer:

219 sheets

Explanation:

D = 5000 per year,

d = daily demand = 5000/365 = 13.70 sheets

T = time between orders (review) = 14 days

L = Lead time = 10 days

σd= Standard deviation of daily demand = 5 per day

I = Current Inventory = 150 sheets Service Level

P = 95% (Probability of not stocking out) q=d(L+D)z σ T+L-1

σ T+L-1= square root (T+L)=5 square root 14+10= 24.495

From Standard normal distribution, z = 1.64 for 95% Service Level (or 5% Stock out)

q=13.70*(14+10)+1.64(24.495)-150

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5 0
3 years ago
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Answer: $220,000

Explanation:

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Any revenue received when the services have not been delivered will be recorded as Unearned Revenue.

With $528,000 in subscription revenue, the monthly subscription is;

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= $44,000

From June to December would be 7 months so they would have earned;

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= $308,000

The amount that they have not earned but have received would therefore be;

= 528,000 - 308,000

= $220,000

<em>This amount will be recorded after they finish deliveries of magazines in next year May. </em>

7 0
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